B Corporations Build Brands by Doing Good

“Better companies make better products,” says the B Lab ad. B Lab is a nonprofit association leading an effort to create a new class of businesses called a B (Benefit) corporation. A B corporation modifies the company's legal framework to integrate verifiable social change with the usual goals of financial responsibility.

In other words, you have to do good things and you have to prove it. In the process, B corporations are changing the definition of success and giving lessons to marketers in all businesses.

A recent PBS NewsHour segment showed how B Labs manages a certification process that audits B corporations. The companies are measured against their stated social and environmental goals and against a set of broader principles of transparency, accountability, and performance. The specific language that each company uses depends on the state where the corporation is chartered. Seven states and Canada currently offer B corporation options with legislation pending in several more.

The structure of a B corporation offers both protections and opportunities for the company and its shareholders. Corporate officers are immunized against shareholder suits on matters of profits. Traditional corporations have a legal obligation to maximize returns to the investors. While many C corporations support non-business interests such as education, environmental, or community support activities, those commitments can change quickly based on shareholder sentiment.

The Wall Street Journal recounts the tale of Ben and Jerry’s Ice Cream being forced to sell to the highest bidder. When privately held by the founders, the Vermont ice cream maker experimented with a wide variety of business models as well as innovating in their marketing and products. Pressure from shareholders overcame the wishes of co-founder Ben Cohen, and led to Unilever buying the ice cream maker in 2000.

Within the new B Corporation framework, companies develop products for a range of markets:

Warby Parker provides low-cost designer eyeglasses for consumers and supports distribution of glasses in developing countries through a nonprofit partner.

So, what can marketers at traditional companies learn from benefit corporations?

Purpose. Think about more than yourself and your traditional market. Colleague Dawn Lyons wrote about opportunities for brands to reach the Muslim market. Starbucks and Yum brands use their money and brand recognition to sustain programs that create jobs and feed the hungry.

Accountability. Treating your people well is a good start. The enthusiasm that shows up in the Zappos customer service Twitter feed shows a place where the service people can solve problems and have fun with customers.

Transparency. BBMG reports that barely 1 percent of surveyed consumers believe what marketers say. Third-party quality and customer satisfaction assessments can demonstrate that you’ve done what you said, and that what you said was important.

Furthermore, social media now gives marketers instant feedback about products and services. You can’t hide. Even when things are rough, honesty and clear action can rescue brands.

The bottom line is the bottom line. It works. Goldman Sachs reported in 2007 that companies with strong Environmental, Social, and Governance (ESG) assessments outperform other stocks by as much as 25 percent. You can do well while doing good.

— Karl Hakkarainen is an independent consultant who works with organizations and professionals in healthcare, law, education, and social services, for whom marketing is a novel and somewhat suspect venture.

@Alice: I, too, would like to work for a company that does good and holds that as a core company value. I really enjoyed this article, Karl. I love that there is a "new, old breed" of companies that wish to do good things. I think society as a whole is a bit fed up with planned obsolesence, profits over quality, and so on. People are bound to become loyal fans of companies which they believe are doing good things and providing good products/services in the process. Bring on the B Corps! (not to be confused with bee corpse, which is an entirely different thing...)

It will be a big challenge for B Lab to ensure that corporations and the consumers recognize it as a credible and widely-accepted source. Many corporations are already making a lot of noise over corporate social responsibility and they might not accept B Lab as an added burden over them.

If it gets recognition, it can surely do a lot of good to the society and bring some ethics in the corporate culture esp when they advertise falsehood through their ads.

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